The Palestinian economy has a diversified structure in which different sectors contribute to the Gross Domestic Product (GDP). In 2009, the sectoral contributions to GDP were: Agriculture and Fishing 8.1%. Mining, manufacturing, water and electricity 14.6%. Construction 7.4%. Transport, storage and communications 8.7%. Brokerage 5.5% and financial services 17.5%.
GDP increased by 6.5% in 2009, while real per capita incomes increased by 3%. This growth is largely the result of augmented development activities, which significantly expanded at the end of 2007 and the beginning of 2008. The most prominent feature of the development activity is that it included all sectors in the West Bank. Development in the Gaza Strip is still disabled due to the Israeli blockade that has been in place for years. The macroeconomic framework for the reform and development plan expects a 15% increase in GDP in the year 2010.
The population of the West Bank and Gaza Strip reached approximately 4 million people in 2009, 62.1% in the West Bank including East Jerusalem and 37.9% in the Gaza Strip. Including the Diaspora, the Palestinian population is estimated at 10 million. Palestinian society is characterised by high population growth, reaching 2.9% annually in 2008 and 2009. Demographically, Palestinian society is predominately young; in 2007, 54.8% of the population was less than 20 years old. The rate of population less than 20 years old in the West Bank is 51.8% and is 59.7% in the Gaza Strip. This age group is decreasing, while the numbers of those aged 15- 64 is increasing, reaching 52.9% of population in 2007 (55.3% of the population in the West Bank and 49.0% in Gaza Strip). Population density in the West Bank and Gaza Strip was approximately 654.5 people per km2 in 2007. Population density varies across the region and between different Palestinian areas. The population density is very high in the Gaza Strip (4,004 people per km2) in comparison with the West Bank (432 people per km2). Gaza is considered among the most densely populated parts of the world.
Palestine has an excellent geographical location, forming an economic and cultural platform and point of contact between three continents – Europe, Asia and Africa. The combined area of the West Bank and the Gaza Strip (6,020 km2) constitutes 23% of the area of pre-1948 Palestine under the British Mandate. The West Bank covers 5,655 km2 and is 130km long and ranges between 40 and 65 km in width. The land area of the Gaza Strip is equal to 365 km2 and is 40 km long and 5-12 km wide. West Bank and Gaza Strip can be characterized by its geography, biodiversity and its multi-climate that varies between coastal, desert, mountains and valleys. The Gaza Strip is located on the Mediterranean coast, in which there are flat beaches and mild waves, it also has sand dunes on the eastern part. The West Bank is more diverse, featuring four topographic zones. The Jordan River Rift Valley is a fertile plain, offering excellent conditions for agricultural production, while the Eastern Slopes overlooking the Valley are a rocky, semi-arid area, leading down to the Dead Sea. The Central Highlands constitute the largest zone, rising 1,000 metres above sea level in places and a semi-coastal zone is found in the west and north-west. The climate is Mediterranean, with hot, dry summers and wet, mild winters. The temperature and rainfall vary with altitude and between topographic zones. This variation provides an attractive setting for tourism as well as cultivation. In 2009, data indicates that the average monthly temperature reached 12.2 degrees Celsius in January and 39.8 in July. Rain is the main source of water in Palestine. The amount of rainfall varies from year to year, depending on geographical diversity and topography of each region. During 2009, rainfall ranged between 115.7ml in the Jericho area and 593.1ml in the Jenin area.
Fertile soil and a moderate climate provide optimum agricultural conditions; some lands can be harvested two to three times a year. Dead Sea salts and minerals form a rich source of natural resources. The West Bank also enjoys large stock of rock that produce high quality stone and marble; the value of which reaches close to US$500m per annum. Presently, stone and marble are exported to around 40 countries. Also, natural gas has been discovered on the Gazan coast, which could potentially possess quantities up to 1 trillion square feet of natural gas.
The population in West Bank and Gaza Strip reached approximately 4 million at the end of 2009. The education level among Palestinians is classified as the highest in the Arab region. Demographically, 57% of the Palestinian population is under 20 years of age and 65% is under 25. Close to 5 million Palestinians live abroad. These people represent an important source of capital and relationships with international markets. The labour force is considered skilled and enjoys good relations and an outstanding reputation among investors. Palestinian human capital provides a genuine opportunity for business growth.
The PNA and the donor community have invested approximately US$250 million annually in infrastructure between 1995 and 2000. Funds were directed to the rehabilitation of electrical, road and water networks and heightened efficiency of these systems. Despite persistent political obstacles after 2000, the PNA renewed its development activities in mid 2007 and allocated more than US$2 billion for its Reform and Development Plan 2008-2010. These activities have resulted in a tangible improvement in infrastructure services. Additionally, the PNA opened the communication and electricity sectors to private investment, facilitating the establishment of the first Palestinian company for land and mobile telephony – PalTel.